Lenders Sued in Colonial Bank Failure

The Federal Deposit Insurance Corp. sued 11 major banks, alleging they misled failed Colonial Bank when they sold the Alabama mortgage lender $388 million in mortgage-backed securities.

The FDIC on Friday sued units of banks, including five of the biggest U.S. mortgage companies, J.P. Morgan Chase & Co., Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Ally Financial Inc. The FDIC alleges the banks misrepresented the risk of mortgage-backed bonds they sold Colonial Bank, by making untrue or misleading...